TRM Weekly Roundup | June 20, 2024

Time for another Weekly Roundup! This time, Ari Redbord , Isabella Chase , and Angela Ang break down these latest developments:

• Binance Chief Compliance Officer Noah Perlman joins TRM Talks
• German authorities arrest ISKP fundraiser ahead of EU Football Championship
• The “crypto election”
• The results are in: BIS 2023 CBDC Survey
• What’s next for the Financial Stability Board on digital assets?
• It’s All About That “Base”: TRM is supporting Coinbase’s Base blockchain
• Anti-money laundering regulations published in the EU’s journal

Dig in below ⬇️

🎙️ Binance Chief Compliance Officer Noah Perlman joins TRM Talks

In the wake of the largest settlement in the history of the United States, Binance e, the world’s largest crypto business, is working to build a best-in-class AML and sanctions compliance program. In our latest TRM Talks, Ari Redbord sits down with Noah Perlman (Chief Compliance Officer at Binance) for a discussion of Noah’s journey from federal prosecutor to the most challenging role in crypto.

Key highlights of the discussion include:

• Building a compliance culture: Noah talks the importance of leadership commitment, resource allocation, hiring the best compliance team, clear policies and procedures, and “blocking and tackling” with transaction monitoring and other compliance tools
• Addressing regulatory challenges: In the wake of myriad regulatory actions, Noah explains how Binance is building a best-in-class compliance program
• Tigran Gambaryan: Noah provides deep insights into the former IRS-CI agent and Binance’s financial crime lead’s detention in Nigeria, his deteriorating health, and his unwavering focus on helping bring Tigran home.

Listen to the full episode here.

🇩🇪 German authorities arrest ISKP fundraiser ahead of EU Football Championship

Last week, German authorities announced the arrest of an individual with German, Polish, and Moroccan citizenship at the Cologne/Bonn airport related, in part, to his “transfer of nearly USD 1,700 in cryptocurrency to an address linked to the Islamic State Khorasan Province (ISKP).”

The individual, according to reports, applied for a position at the European Football Championship (held in Germany in June/July 2024). Over the last few months, ISKP has been encouraging its supporters to target sporting events including major soccer/football matches.

Following the arrest, TRM observed ISKP quickly move funds on the blockchain. This is similar to ISKP’s on-chain behavior following the terrorist attacks in Moscow in March, which were attributed to the group. As TRM reported in March, ISKP continues to utilize cryptocurrency to fundraise and fund its activities around the world.

TRM Labs is currently tracking dozens of fundraising campaigns associated with terrorist groups around the world. We are committed to supporting law enforcement globally who are working tirelessly to thwart terrorist attacks and continue to monitor the movement of funds.

🗳️ The “crypto election”

The 2024 US presidential election is heating up to be the first “crypto election”—characterized by both candidates attempting to appeal to both crypto investors (reportedly some 50 million of them) and to the crypto industry, which is deploying tremendous resources behind favorite candidates. Where there is a ton of nuance to each candidate’s views, here is a TL/DR on where the candidates stand.

Donald Trump: The former president has increasingly embraced the crypto community. Despite his past skepticism, Trump has made recent supportive comments about digital currencies and has promised to end the regulatory crackdown. He has also hosted several crypto executives at Mar-a-Lago, signaling his intent to align more closely with the industry.

Joe Biden: President Biden’s administration, led by SEC Chair Gary Gensler, has taken a stringent approach towards the crypto industry, initiating numerous lawsuits and criminal charges against leading crypto firms. However, there are indications of a shift. Influential Biden supporters like Mark Cuban have urged the campaign to engage more positively with the crypto community. Recent discussions between Biden officials and major crypto firms like Coinbase and Ripple suggest a potential softening of the administration’s stance.

Robert F. Kennedy Jr.: The independent candidate has actively courted the crypto vote, making his first campaign appearance at a Bitcoin event in Miami, meeting crypto industry players at CoinDesk ’s Consensus, and holding fund-raising meetings with industry leaders.

The 2024 election is shaping up to be a pivotal moment for the cryptocurrency industry. The political mobilization of crypto holders, substantial financial investments in pro-crypto candidates, and the contrasting approaches of the presidential candidates underscore the industry's growing influence. As the election approaches, the future regulatory environment for digital assets in the US may well be determined by the outcome, making this a high-stakes battle for the crypto community.

🌐 The results are in: BIS 2023 CBDC Survey

For the last seven years, the Bank for International Settlements has surveyed the world’s central banks to find out their appetite for a Central Bank Digital Currency (CBDC). The results from 2023’s survey are in. Based on responses from 86 central banks, BIS found that:

• 94% of surveyed central banks are exploring a CBDC
• 2/3 respondents said preserving the role of central bank money is among the key drivers of the CBDC work
• The likelihood that central banks will issue a wholesale CBDC within the next six years now exceeds the likelihood that they will issue a retail CBDC
• On retail CBDCs, more than half of central banks are considering holding limits, interoperability, offline options, and zero remuneration

Regarding the broader digital asset ecosystem, 63% of banks said that they have accelerated their work on CBDCs in reaction to developments in stablecoins and other crypto assets. The BIS cautioned that, “The large-scale use of stablecoins for payments could have serious implications for the safety and efficiency of payment ecosystems.”

🏦 What’s next for the Financial Stability Board on digital assets?

The BIS was not the only financial standard-setter to make statements on digital assets last week. The Financial Stability Board (FSB) held its plenary in Toronto. Attendees discussed the implementation of the FSB’s global regulatory framework for crypto asset activities and highlighted two emerging trends.

• First, crypto-assets pose particular challenges for monetary policy and capital flow management in emerging markets and developing economies (EMDEs)
• Second, the relatively higher levels of adoption and risks of global stablecoin arrangements in EMDEs present additional challenges

Another key topic was non-bank financial intermediation (NBFI). NBFIs encompass a wide range of financial activities, entities, and infrastructures—including investment funds; insurance companies; pension funds; and increasingly, some are including crypto funds. NBFIs play a crucial role in financing the real economy, serving as valuable alternatives to traditional bank financing—but they can pose systemic risks.

At present, the EU Commission is consulting on this topic, and has asked, “Do you observe any systemic risks and vulnerabilities emerging from crypto assets trading and intermediaries in the EU?” Get your answers in by November 22, 2024!

⛓️ It’s All About That “Base”

TRM is proud to announce that we are supporting Coinbase ’s Base blockchain!

What is Base? "Base" blockchain is a layer 2 (L2) scaling solution built on top of the Ethereum blockchain. It aims to provide a more efficient and scalable platform for decentralized applications (dApps). Base leverages the Optimistic Rollup technology, which processes transactions off the main Ethereum chain while still maintaining the security and decentralization of the Ethereum network.

Base aims to enhance the Ethereum ecosystem by providing a scalable, cost-effective platform for dApps while maintaining the security and decentralization principles of the underlying Ethereum blockchain.

Learn more about how TRM can support your blockchain intelligence needs here.

🇪🇺 Anti-money laundering regulations published in the EU’s journal

On Wednesday, the EU’s Anti-Money Laundering Regulation (AMLR), the sixth Anti-Money Laundering Directive (6AMLD), and the Regulation that established the AML Authority (AMLA) were published in the Official Journal of the EU. The publication kicks off the implementation clock. Here are the dates you need to know:

• June 26, 2024: AMLA’s regulation enters into force
• July 9, 2024: AMLR enters into force and applies from July 10, 2027
• July 9, 2024: 6AMLD enters into force and must be transposed by member states by July 10, 2027—although some stipulations require entry into force by July 10, 2025

What’s next? Getting AMLA operational early next year is a high priority. After selecting Frankfurt as the home of the new body in February, the AMLA is now looking for its first chair. Applications close on July 8, after which the successful candidate will need approval by the Parliament and Council.